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March 26, 2003
AccountAbility Launches Assurance Standard for Corporate Responsibility Reporting
    by William Baue

Investors and other stakeholders stand to benefit from the standardized verification of corporate reporting on social, environmental, and economic performance.


As corporate reporting on social, environmental, and economic performance has become more prevalent, investors are increasingly seeking mechanisms to verify the accuracy, comparability, and relevance of such reporting. Yesterday saw the launch in London of just such a mechanism, the AA1000 Assurance Standard by AccountAbility. AccountAbility is an international nonprofit institute dedicated to promoting both accountability and sustainability.

"The AA1000 Assurance Standard provides an antidote for the growing crisis of confidence in business," said Tom Delfgaauw, the AccountAbility chair. Mr. Delfgaauw is also former vice president of sustainable development for Shell (ticker: RD), an AccountAbility member.

Several AccountAbility members have already begun using the AA1000 Assurance Standard in its draft form. These member-users include corporations such as the Danish pharmaceutical company Novo Nordisk (NVO) and the UK-based Co-operative Bank (CPBB_p.L), as well as firms that already offer verification services such as PricewaterhouseCoopers and KPMG (KCIN). AccountAbility's membership also includes nongovernmental organizations (NGOs) such as Forum for the Future and the New Economics Foundation.

"Sustainability reports will not have a shred of credibility for NGOs if they are not externally verified using a generally accepted framework," said Ed Mayo, executive director of the New Economics Foundation.

The AA1000 Assurance Standard seeks to remedy the credibility gap in corporate responsibility reporting by creating just such an assurance framework, the first in the world to be offered on a non-proprietary platform. AA1000 is free, publicly accessible, and open-source, meaning that it will continue to be developed in collaboration with its users.

The AA1000 Assurance Standard is not meant to replace or compete against existing corporate responsibility reporting mechanisms such as the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines. AccountAbility designed the Assurance Standard to complement these existing mechanisms.

"As the transparency initiative continues to drive demand for sustainability reporting to new levels, assurance has a key role to play in the future of reporting," said Ernst Ligteringen, CEO of the GRI. "The GRI welcomes AccountAbility's important contributions towards advancing work in this area."

As a complement to the launch of the AA1000 Assurance Standard, AccountAbility also released a report entitled The State of Sustainability Assurance. AccountAbility plans to issue this report annually. The report points out that the SRI community highly values corporate responsibility reporting assurance but lacks the resources necessary to carry out assurance of its own research, much less demand assurance of others. The report describes this phenomenon anecdotally.

"As one SRI person concluded with some regret, 'to be frank, hardly any of our data is formally assured, certainly not the bulk that we get through questionnaires. Assurance is important of course, but we are not really at that point, and in any case we do not think much of the current approaches.'"

The AA1000 Assurance Standard will offer social investors the opportunity to evaluate their holdings' corporate responsibility reporting. Before now, investors have had to accept the accuracy and reliability of corporate responsibility report audits on faith. However, blind trust in the auditing profession seems misplaced after the events of the past few years.

"The [Arthur] Andersen fiasco raised profound questions around traditional forms of assurance," said John Elkington, chair of SustainAbility, a London-based research and consultancy firm specializing in its namesake issue. "The AA1000 Assurance Standard offers a unique opportunity to resurrect assurance, phoenix-like, from the ashes of Enron, WorldCom and other trust-eroding corporate disasters."

 

 
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